SCARS Institute’s Encyclopedia of Scams™ Published Continuously for 25 Years
A Rug-Pull Is Often The Way The Scammer Cuts Off The Victim & Disappears
In financial fraud, a “rug-pull” refers to a deceptive tactic commonly associated with cryptocurrency projects, particularly decentralized finance (DeFi) platforms. A rug-pull occurs when the creators or developers of a project suddenly and intentionally drain the funds or liquidity from the project, leaving investors with worthless or significantly devalued tokens or assets.
However, a rug-pull also happens in Ponzi schemes, lotto scams, romance scams, and any other scam where the scammer can grab the money and run.
Rug-Pull
The term “rug-pull” draws its analogy from the act of pulling a rug out from under someone’s feet, causing them to lose balance and fall. Similarly, in the context of cryptocurrency projects, a rug-pull involves the sudden removal of liquidity or misappropriation of funds, causing investors to suffer substantial financial losses.
Scammers may entice crypto investors by promoting a project, promising high returns or innovative features. However, once a significant amount of investment has been made and the fake project gains traction, the scammers execute the rug-pull by swiftly draining the project’s funds, often leaving investors with no recourse to recover their investments.
This also happens in 419 Advance Fee Fraud as well!
Why Don’t We Call These A Rug-Pull Scam?
Here is a way to think about it. A scam is an overall collection of stories that make it convincing to the victim under the broad category of “Long Cons”. The tactics or techniques are the various processes or mechanics or techniques used during the execution of that narrative for grooming, manipulation, control, and harvesting.
In that context, a rug-pull is a harvesting technique or tactic used to secure the money already stolen and to cut off the victim and obscure the criminals. Variations even hapen in grandparent scams once the money is paid the scammers go silent leaving the family members guessing what ultimately happened to their grandchild, etc.
See what I mean? Think overall process, not individual action. In the case of a romance scam, people often call the way the money is sent as the scam, but it is just a part of the process, part of the mechanics – such as gift card scams or wire transfer scams. Even APP fraud is really not a scam, just a tactic – a part of the overall relationship scam.
Take a bank robbery for example. Do we call them “Teller Note Crimes”? That is a tactic they use, but that is not the overall crime, it is bank robbery.
A “Rug-Pull” Is Used In Different Kinds Of Scams And Fraud?
While the term “rug-pull” originated in the context of stock trading and investments, and is also used in cryptocurrency scams, it has also been used to describe deceptive tactics used in various other scams and frauds.
The concept of a rug-pull generally refers to an act of abruptly and intentionally betraying the trust or deceiving individuals to their detriment and helping the criminal to make a clean break with the victim.
Here are a few examples of how the concept of a rug-pull is used in different kinds of scams and frauds:
- Investment Scams: In investment scams, a rug-pull occurs when fraudsters entice individuals to invest their money in a seemingly lucrative opportunity. They may promise high returns or present a convincing investment strategy. However, once a significant amount of money has been invested, the scammers execute the rug-pull by disappearing or diverting the funds for personal gain. Investors are left with substantial financial losses and no recourse for recovery.
- Ponzi Schemes: Ponzi schemes involve using funds from new investors to pay returns to earlier investors, creating an illusion of profitability. A rug-pull in a Ponzi scheme happens when the fraudsters abruptly shut down the operation, leaving investors with significant financial losses. The scammer may disappear with the remaining funds or declare bankruptcy, revealing the unsustainable nature of the scheme.
- Multi-Level Marketing (MLM) Scams: Some MLM schemes operate as rug-pulls by misleading participants about the potential earnings and the sustainability of the business model. Promoters often manipulate income claims and make false promises to recruit new members into the network. As the scheme collapses or when the recruits realize they cannot earn the promised profits, it results in a rug-pull effect where participants suffer financial losses.
- Online Auction or Purchase Scams: Rug pulls can also occur in online auctions or sales transactions. Scammers may list fake or non-existent items for sale, attracting unsuspecting buyers. After receiving payment, the fraudsters disappear without delivering the purchased goods, leaving the buyers defrauded and with no way to recover their money.
The concept of a rug-pull refers to fraudulent acts where trust is intentionally manipulated or betrayed, resulting in significant financial losses for victims. It emphasizes the sudden and unexpected nature of the deception, leaving individuals in a state of shock and vulnerability. It is crucial for individuals to exercise caution, conduct due diligence, and be aware of potential red flags to avoid falling victim to rug-pulls in various forms of scams and frauds.
Regular Stock Market Scams
There are various types of fraud or market manipulation schemes that can occur in regulated stock markets that involve rug-pulls, including:
- Pump and Dump Schemes: In a pump and dump scheme, fraudsters artificially inflate the price of a stock through false or misleading information, enticing investors to buy the stock. Once the price reaches a certain level, the fraudsters sell their shares, causing the price to collapse and leaving other investors with significant losses.
- Insider Trading: Insider trading involves trading securities based on material, non-public information. It occurs when individuals with privileged access to company information use that information to make trades for their own benefit, which is illegal in most jurisdictions.
- Stock Manipulation: Stock manipulation schemes involve intentionally influencing the price or trading volume of a stock to create artificial demand or supply. This can include activities such as spreading false rumors, conducting wash trades (buying and selling to create the illusion of activity), or engaging in other manipulative practices.
Ghosting vs. Rug-Pull
In relationship scams, “ghosting” refers to a tactic employed by scammers to abruptly cut off all communication with their victims, effectively disappearing without any explanation or trace – a rug-pull. It involves the scammer ceasing all contact, blocking the victim, and leaving them bewildered and often emotionally distraught.
Ghosting is a manipulative technique used by scammers to further exploit their victims emotionally (and for the scammer/criminal to make a clean getaway.) Initially, scammers build a connection and establish a romantic relationship with their targets. They invest time and effort into cultivating a bond, gaining the trust and affection of the victim.
However, once the scammer has achieved their objective, such as extracting money or personal information, they execute the ghosting tactic (a rug-pull.) They vanish suddenly and sever all contact, leaving the victim confused, hurt, and unable to reach out for clarification or closure. This abrupt and unexplained disappearance is designed to prevent the victim from realizing the truth and potentially seeking help or taking legal action.
Ghosting in relationship scams can have devastating psychological and emotional effects on the victims. They are left feeling betrayed, abandoned, and often blaming themselves for the sudden end of the relationship. The emotional impact can be particularly severe if the victim had developed strong feelings and invested significant time and emotions into the relationship.
It is important to note that ghosting can occur in legitimate relationships as well, where one party decides to end the connection without explanation or warning. However, in the context of relationship scams, ghosting is a deliberate strategy employed by scammers to exploit vulnerable individuals and escape accountability for their fraudulent actions.
To protect oneself from falling victim to relationship scams and experiencing ghosting, it is crucial to exercise caution and be vigilant. Being aware of common signs of scams, such as requests for money or personal information, inconsistencies in the scammer’s story, and avoiding revealing too much personal information too quickly, can help individuals identify potential red flags early on. Additionally, seeking advice from trusted friends or family members and conducting research on the person’s background can provide valuable insights and help avoid falling into a scammer’s trap.
For all intents and purposes, ghosting is the same as a rug-pull.
Do You Need Support?
Get It Now!
SCARS provides the leading Support & Recovery program for relationship scam victims – completely FREE!
Our managed peer support groups allow victims to talk to other survivors and recover in the most experienced environment possible, for as long as they need. Recovery takes as long as it takes – we put no limits on our support!
SCARS is the most trusted support & education provider in the world. Our team is certified in trauma-informed care, grief counseling, and so much more!
To apply to join our groups visit support.AgainstScams.org
We also offer separate support groups for family & friends too.
Become a
SCARS STAR™ Member
SCARS offers memberships in our STAR program, which includes many benefits for a very low annual membership fee!
SCARS STAR Membership benefits include:
- FREE Counseling or Therapy Benefit from our partner BetterHelp.com
- Exclusive members-only content & publications
- Discounts on SCARS Self-Help Books Save
- And more!
To learn more about the SCARS STAR Membership visit membership.AgainstScams.org
To become a SCARS STAR Member right now visit join.AgainstScams.org
-/ 30 /-
What do you think about this?
Please share your thoughts in a comment below!
Article Rating
Table of Contents
- Rug-Pull – A Scammer Tactic
- Rug-Pulls Are Used In Crypto And Other Kinds Of Scams
- A Rug-Pull Is Often The Way The Scammer Cuts Off The Victim & Disappears
- Rug-Pull
- Why Don’t We Call These A Rug-Pull Scam?
- A “Rug-Pull” Is Used In Different Kinds Of Scams And Fraud?
- Regular Stock Market Scams
- Ghosting vs. Rug-Pull
- Do You Need Support?
Get It Now! - Become a
SCARS STAR™ Member - Scam Victim Self-Help Do-It-Yourself Recovery Books
- SCARS Printed Books For Every Scam Survivor From SCARS Publishing
MOST POPULAR COMMENTED ARTICLES
POPULAR ARTICLES
Rapid Report Scammers
In the U.S. & Canada
U.S. & Canada Suicide Lifeline 988
RATE THIS ARTICLE?
LEAVE A COMMENT?
Thank you for your comment. You may receive an email to follow up. We never share your data with marketers.
Recent Comments
On Other Articles
on Common Tactics & Types Of Relationship Scams: “Having this information now is critical for preventing being scammed again and again. Understanding that the landscape is constantly changing,…” Apr 25, 18:39
on Recognizing Fake U.S. Military Identification Cards – Infographic: “It is a crime to copy or photograph a Military ID. Just by them sending it to you means it…” Apr 25, 00:51
on Recognizing Fake U.S. Military Identification Cards – Infographic: “How can u tell if it’s a real military id” Apr 24, 23:54
on Retrospective Framing – A Cognitive Bias That Changes The Past – 2023: “Thank you for this great article. I have experienced a small portion of retrospective framing in the last days of…” Apr 23, 16:18
Important Information for New Scam Victims
- Please visit www.ScamVictimsSupport.org – a SCARS Website for New Scam Victims & Sextortion Victims
- Enroll in FREE SCARS Scam Survivor’s School now at www.SCARSeducation.org
- Please visit www.ScamPsychology.org – to more fully understand the psychological concepts involved in scams and scam victim recovery
If you are looking for local trauma counselors please visit counseling.AgainstScams.org or join SCARS for our counseling/therapy benefit: membership.AgainstScams.org
If you need to speak with someone now, you can dial 988 or find phone numbers for crisis hotlines all around the world here: www.opencounseling.com/suicide-hotlines
A Note About Labeling!
We often use the term ‘scam victim’ in our articles, but this is a convenience to help those searching for information in search engines like Google. It is just a convenience and has no deeper meaning. If you have come through such an experience, YOU are a Survivor! It was not your fault. You are not alone! Axios!
A Question of Trust
At the SCARS Institute, we invite you to do your own research on the topics we speak about and publish, Our team investigates the subject being discussed, especially when it comes to understanding the scam victims-survivors experience. You can do Google searches but in many cases, you will have to wade through scientific papers and studies. However, remember that biases and perspectives matter and influence the outcome. Regardless, we encourage you to explore these topics as thoroughly as you can for your own awareness.
Statement About Victim Blaming
Some of our articles discuss various aspects of victims. This is both about better understanding victims (the science of victimology) and their behaviors and psychology. This helps us to educate victims/survivors about why these crimes happened and to not blame themselves, better develop recovery programs, and to help victims avoid scams in the future. At times this may sound like blaming the victim, but it does not blame scam victims, we are simply explaining the hows and whys of the experience victims have.
These articles, about the Psychology of Scams or Victim Psychology – meaning that all humans have psychological or cognitive characteristics in common that can either be exploited or work against us – help us all to understand the unique challenges victims face before, during, and after scams, fraud, or cybercrimes. These sometimes talk about some of the vulnerabilities the scammers exploit. Victims rarely have control of them or are even aware of them, until something like a scam happens and then they can learn how their mind works and how to overcome these mechanisms.
Articles like these help victims and others understand these processes and how to help prevent them from being exploited again or to help them recover more easily by understanding their post-scam behaviors. Learn more about the Psychology of Scams at www.ScamPsychology.org
Psychology Disclaimer:
All articles about psychology and the human brain on this website are for information & education only
The information provided in this article is intended for educational and self-help purposes only and should not be construed as a substitute for professional therapy or counseling.
While any self-help techniques outlined herein may be beneficial for scam victims seeking to recover from their experience and move towards recovery, it is important to consult with a qualified mental health professional before initiating any course of action. Each individual’s experience and needs are unique, and what works for one person may not be suitable for another.
Additionally, any approach may not be appropriate for individuals with certain pre-existing mental health conditions or trauma histories. It is advisable to seek guidance from a licensed therapist or counselor who can provide personalized support, guidance, and treatment tailored to your specific needs.
If you are experiencing significant distress or emotional difficulties related to a scam or other traumatic event, please consult your doctor or mental health provider for appropriate care and support.
Also read our SCARS Institute Statement about Professional Care for Scam Victims – click here to go to our ScamsNOW.com website.
My scammer didn’t give up for months to get me to send even more money after I discovered it was all a scam. Finally they stopped but they were persistent.
My scammer utilized ghosting as a way to end the scam. It was quite a tramatic experience when it happened but it madd it obvious that I was scammed once it happened.